Details

Autor(en) / Beteiligte

• Dwyer, Karen‐Ann M.
• Brennan, Niamh M.
• Kirwan, Collette E.

Titel

Auditor Materiality in Expanded Audit Reports: More (Disclosure) is Less

Ist Teil von

• Australian accounting review, 2023-03, Vol.33 (1), p.31-45

Ort / Verlag

Melbourne: Australian Society of Certified Practising Accountants

Erscheinungsjahr

2023

Quelle

Business Source Ultimate【Trial: -2024/12/31】【Remote access available】

Beschreibungen/Notizen

• The United Kingdom (UK) Financial Reporting Council (FRC) introduced expanded audit reports to improve audit report disclosures and render audits more transparent to financial statement users. This study examines audit materiality threshold disclosures, providing descriptive evidence of how auditors disclose materiality information in UK audit reports. This research uses manual content analysis (i) to assess auditors’ benchmarks and the percentages auditors apply to those benchmarks. The analysis examines (ii) auditors’ use of non‐GAAP benchmarks, including non‐recurring and recurring item exclusions and (iii) auditors’ rationales for their benchmark choices. The research finds that auditors choose a wide variety of benchmarks and apply a wide range of percentages to the chosen benchmarks. Non‐GAAP adjustments are pervasive. Auditors’ rationales for benchmark choices include that the benchmark is a financial statement performance measure, and the benchmark eliminates volatility. The authors question whether the FRC's expanded disclosures have met its transparency objectives and concludes that ‘more (disclosure) is less’.